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Cablegate: China/Africa: A Provincial Perspective From Henan

VZCZCXRO1035
PP RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3853/01 2820837
ZNR UUUUU ZZH
P 080837Z OCT 08
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 0336
INFO RUEHOO/CHINA POSTS COLLECTIVE
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 003853


SENSITIVE
SIPDIS

TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ECON EINV EFIN ETRD AX CH
SUBJECT: CHINA/AFRICA: A PROVINCIAL PERSPECTIVE FROM HENAN

Refs: A) Beijing 10969; B) "China's Outward Foreign
Direct Investment", OECD Secretariat Draft Report,
22FEB2008

1. (SBU) Summary: China's efforts to expand trade and
investment ties with Africa were prominently on
display at the 5th China Henan International Investment
and Trade Fair held in Zhengzhou, Henan Province
August 26-28, although little concrete business
materialized. A day-long "Go Global" investment
seminar and an evening reception with participants
from approximately 30 African as well as Latin
American and Pacific countries showed that the push to
promote China's outward investment to Africa and other
developing countries is evident even at the provincial
level and continues two years after the November 2006
Forum on China-Africa Cooperation (FOCAC) was held in
Beijing. End Summary.

The Normal Rhetoric
-------------------

2. (U) Econoff attended the August 26-28 5th China
Henan International Investment and Trade Fair held in
Zhengzhou, Henan Province. The Vanuatu Ambassador to
China Lo Chi Wai was the ranking diplomat at the
opening ceremonies on August 26 but representatives
from Africa constituted the largest block of foreign
diplomats and commercial attaches. The Ethiopian
Ambassador to China Hailekiros Gessesse made keynote
remarks at a banquet hosted by Henan Vice Governor Xu
Jichao for the visiting diplomats. In his remarks
Vice Governor Xu focused on Africa, noted China's
commitment to Africa since FOCAC in 2006, and said
that Henan was promoting local companies' efforts to
increase exports and invest in Africa and other
foreign countries in order to promote mutual
development. The Ethiopian Ambassador highlighted
strong south-south ties, strong economic growth in
Ethiopia and Africa in recent years, and the role that
China has played in helping Africa achieve these high
growth rates. (Note: African diplomats generally
outranked representatives from other Embassies, with
Nigeria and Uganda also represented by their Deputy
Chiefs of Mission. Henan trade and investment fair
organizers offer to pay for the hotel and living costs
for all diplomats, not just those from Africa. End
Note.)

Backed By Little Substance
--------------------------

3. (SBU) Ambassador Lo and other embassy
representatives from Africa, Latin America, and the
Pacific gave presentations at an August 27 all-day "Go
Global" investment forum. Approximately 100 Chinese
business representatives participated in the event,
but Econoff spoke with a few Chinese participants that
clearly had neither the capacity nor intention to
invest in Africa. Wei Zhiyong, Director of the Henan
Development and Reform Commission Foreign Economy
Department told Econoff that Henan-based companies
have some trade ties with Africa but have not invested
significantly on the continent. Outward investment in
Asia and other more familiar markets was somewhat more
common. (Note: Between 2000 and 2006 China's overall
outward FDI grew at an average annual growth rate of
116 percent, which is among the fastest in the world.
By the end of 2006, 64% of China's outward FDI stock
was in Asia, compared to only 3.4% in Africa (Ref B).
We do not have provincial-level figures for Henan.
End Note.)

4. (SBU) Embassy representatives from Sierra Leone,
Kenya, Zimbabwe, Nigeria, and Uganda mentioned some
existing investment projects and ongoing trade ties
with their respective countries but did not appear
enthusiastic about new business resulting from the
fair. Sam Savou, Representative for the Pacific
Islands Forum Trade Office said he was not aware of
any significant trade or investment agreements signed,
but that many of the African, Latin American and
Pacific Island representatives saw this event as a
networking opportunity that would hopefully produce
business in the future.

But a Reflection on China's Commitment to Ties with

BEIJING 00003853 002 OF 002


Africa Nonetheless -- Comment and Background
--------------------------------------------- ---------


5. (SBU) African countries participated in a similar
fashion in the 2006 Henan Trade Fair (Ref A) and Henan
designated 2007 as "China-Africa Cooperation Year."
Similarly, we have observed African and other
developing countries taking advantage of other trade
and investment fairs in China as well, including the
September 2008 China International Trade and
Investment Fair in Xiamen. Henan's event is therefore
not a new phenomenon. It is also not a good indicator
of actual trade and investment flows. But the Henan
Provincial government's consistent focus on at least
making the public effort to promote these trade and
investment ties indicates that China's efforts to
promote outward investment and increase ties with
Africa and other developing countries are serious
enough that they extend to a province that is among
the least likely to play a prominent role in this area.

6. (SBU) Henan Province lags behind coastal provinces
both in attracting foreign direct investment and
shifting to export-oriented manufacturing (Ref A), as
well as in outward investment. Henan's economy is
still largely dominated by agriculture, not the
industrial or energy-focused companies that dominate
China's outward investment in Africa (Ref B).

7. (SBU) Trade between China and Africa accelerated
between 2000 and 2006 at an average rate of 33 percent
per annum and Beijing expects trade with Africa to hit
USD 100 billion by 2010, according to the OECD and
press reports. China's exports to Africa grew from
USD 4.2 million in 2000 to USD 22.9 billion in 2006
(Ref B).

PICCUTA

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